Exerpted from: William Sahlman, Harvard Business Review, July - August 1997
If you want to speak the language of investors - and also make sure that you have asked yourself the right questions before setting out on the most daunting journey of a businessperson's career - I recommend basing your business plan on the framework that follows. It does not provide the kind of 'winning' formula touted by some current how-to books and software programs for entrepreneurs. Nor is it a guide to brain surgery. Rather, the framework systematically assesses the four interdependent factors critical to every new venture:
The People - the men and women starting and running a venture, as wekk as the outside parties providing key services or important resources for it, such as its lawyers, accountants, and suppliers.
The Opportunity - a profile of the business itself: what it will sell and to whom, whether the business can grow and how fast, what its economics are, who and what stand in the way of success.
The Context - the big picture: the regulatory environment, interest rates, demographic trends, inflation and the like. Basically, factors that inevitably change but cannot be controlled by the entrepreneur.
Risk and Reward - an assessment of everything that can go wrong and right, and a discussion of how the entrepreneurial team can respond.
For the full article in pdf, click here.
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